Traditional exchange systems have primarily been running local businesses offering trading for clients located within the same region as the exchange system. However, the introduction of electronic market places as well as new alternative market places has changed the trading landscape. A market place doesn't have to be local anymore.
A general trend in many electronic market places is therefore to offer a global business. A trader can connect to a trading system from anywhere on the globe.
Together with the global offering comes also a need for extended trading hours. As a result of this some market places are today offering 24 h trading of the same financial instruments such as stocks bonds foreign exchange (FX) etc. It is common for these types of markets to have a trading activity that “follows the sun”. This means that most orders that are sent in to an instrument during a specific part of the 24-hour period come from the location of the sun at that time. However orders may be sent from other locations on earth which are outside of the “normal” trading hours. For example Asian traders send in orders during Asian hours while EU traders send in orders during the EU hours and so forth. An example of such a system is disclosed in the U.S. Pat. No. 6,983,259. However during Asian hours EU traders may also send in orders.
A general problem with distributed exchange systems is latency and bandwidth. Minimizing latency and bandwidth has become more and more important aspects of computerized exchange systems, especially with the introduction of algorithmic traders. A primary root cause to latency is the distance between the actual central matching engine and the connecting parties.
For a computerized exchange system that offers 24h trading with global access this fact becomes a problem since the matching engine normally has one physical location.
A further problem associated with existing systems is the massive amount of information that is created and which needs to be distributed to all participants in the distributed system; this causes bandwidth problems in the systems.